Tax fraud covers a range of activities, including filing a tax return under someone else’s Social Security number, altering a tax return without the taxpayer’s consent and failing to follow federal and state tax laws. These are serious offenses that lead to fines and, in some cases, jail time. If you or someone you know is a victim of tax fraud, you probably want to know how to report tax fraud and what resources are available to help you.
- How To Report Tax Fraud to the Internal Revenue Service
- Other Ways To Report Suspected Tax Fraud
- Is There a Reward for Reporting Tax Fraud?
- Can I Report State Tax Fraud?
- How To Prevent Identify Theft
You might not find out about the scam until your e-filed return is rejected, or the IRS notifies you that you already filed a return or that it suspects foul play. If this happens to you, here are the steps you need to report tax fraud and secure your tax refund:
No one wants to be the victim of tax fraud or tax scams, so it’s important to be aware of signs that your identity has been stolen. Here are some to consider:
- Multiple tax returns filed using your Social Security number
- IRS notice that you owe additional taxes
- IRS notice of a tax refund offset
- IRS notice of collection actions for a year you did not file taxes
- IRS notice that you earned income from a company you never worked for
If the IRS sends you a letter about a suspicious return for your Social Security number, call the IRS at the number listed in the letter. Don’t respond to any emails, texts or phone calls that claim to be from the IRS. It’s against the agency’s policy to initiate contact with taxpayers by email, text message or social media channels to request personal or financial information. Should the IRS need to contact you, it would do so by mail first.
If you receive fake IRS emails, forward them to the IRS at firstname.lastname@example.org. Then, be sure to delete the original emails. If you suspect you’ve received a possible phishing scam by phone or fax call, report IRS impersonation scams to the Treasury Inspector General for Tax Administration using the online form.
Find Out: 8 Reasons the IRS Could Audit You
Complete the printable IRS Form 14039, Identity Theft Affidavit. This is the key action you must take to report tax fraud if you are not able to file your return electronically. The form alerts the IRS that you can’t file your return because one was already filed with your Social Security number. It’s also the form you must fill out if the IRS sends you a notice related to suspicious activity regarding your Social Security number.
Along with the form, you’ll need to provide personal information, including your contact information, an explanation of the issue and how you found out about it.
Print your completed Form 14039 Identity Theft Affidavit along with your tax return if you plan to mail it in. The form can also be completed online at the Federal Trade Commission, and the FTC will transfer the form to the IRS.
Keep copies of anything you send to the IRS, especially tax-related documents. You should receive a letter from the IRS confirming receipt.
After you submit your forms and tax return, you will receive an acknowledgment letter. Your case will be assigned to the Identity Theft Victim Assistance organization, which has employees with specialized training to help you. Most cases are reviewed and resolved within 120 days, but some complex cases might take 180 days or more.
If the IRS is unable to resolve the matter, you can contact the Taxpayer Advocate Service, a division within the IRS, to provide you with tax help. Contact your local Taxpayer Advocate Service office to speak with someone about the kind of tax-related problems you need help with.
Good To Know: Lost Your W-2? Here’s What To Do
Identity theft isn’t the only type of tax fraud. The IRS also warns Americans to be on the lookout for individuals or businesses who are guilty of the following issues:
- False exemptions or deductions
- False or altered documents
- Failure to pay tax
- Unreported income
- Organized crime
- Failure to withhold
If you suspect or know of someone committing tax fraud, you can report a scam using Form 3949-A. You can obtain a copy of the form by calling the IRS Tax Fraud Hotline at 800-829-0433, but the IRS will not listen to allegations over the phone, nor can you report tax fraud online at the IRS website. You can, however, report tax fraud anonymously.
You can also send a letter that includes the following information:
- The name and address of the person or business
- The person’s Social Security number or employer identification number
- A description of the fraud
- How you became aware of the information
- The years in which the fraud occurred
- The amount of unreported income
- Your name, address and phone number (unless you wish to remain anonymous)
Learn More: Tax Fraud and Tax Evasion Penalties Explained
It is possible to receive a reward for reporting suspect tax fraud under the Whistleblower Law.
To claim a reward, you have to file IRS Form 211 and provide the IRS with evidence of the tax fraud.
In addition, you must agree to assist the Whistleblower Office and its lawyers with the case. Processing a tax fraud case can take years, and there is no guarantee that you will receive a reward. The IRS may award up to 15% of the money they get from the taxpayer, however. These awards are subject to federal tax and can be reduced if the IRS learns that the whistleblower participated in the tax fraud.
To learn more about the Whistleblower Law, visit the IRS website.
Keep Reading: 7 Ways You May Be Committing Tax Fraud
Yes, you can report state tax fraud, but you have to contact the appropriate department in that state. Start by contacting the Department of Revenue or Comptroller in the state where the tax fraud took place. Even if your state does not collect a state income tax like Florida or Texas, you can report fraud. It is illegal to misappropriate state money.
Protect Yourself: Don’t Fall For One of the ‘Dirty Dozen’ Tax Scams
If criminals have enough information to file a fraudulent tax return, they may be taking advantage of you in other ways. If you become a victim, understanding how to prevent identity theft will help safeguard you and your private information going forward.
In addition to reporting your tax fraud situation to the IRS, the IRS suggests you notify other authorities and businesses of your stolen identity. The FTC recommends that you file an online complaint at consumer.ftc.gov. In addition, you should put a fraud alert on your credit report with one of the three major credit bureaus: Experian, Equifax and TransUnion.
The IRS also recommends that you contact your bank and close any accounts that have fraudulently been opened in your name.
Click through to read more on preventing your tax refund from being stolen.
More From GOBankingRates